Crowdfunding ranks among top investment options

“Money makes the world go ‘round” is the cliche with everlasting prevalence in the business world. For budding entrepreneurs, money presents an unavoidable barrier to entry into the world of business-owning; their new inventions or products simply can’t launch far off the ground without it. But, thanks to a popular trend pulling some away from traditional venture capitalism, people are getting past that barrier more easily.

Crowdfunding involves reaching out into certain communities, which could include family, friends, business owners and other investors. With sites like Kickstarter, Indiegogo, Razoo and Causes making it easier for people to get started, it could become the ideal way to propel a new project off the ground.

In 2012, investor and product specialist Tanya Prive wrote a Forbes article, which describes some of the values behind crowdfunding.

“The idea is to create a compelling message that readers will be drawn to,” Prive wrote.

Readers are not the only targets of crowdfunding efforts. Entrepreneurs are also using video as a way to reach their audience. That’s according to Kickstarter, which says there’s a 66 percent chance of getting funded after uploading a good project video. Without it, there’s only about a 30 percent chance.

Kickstarter says it’s about “telling your story” and going further than just selling people on a product. Renowned crowdfunding education site Crowdfundingdojo.com calls it “selling your dream.”

For Matt Sikora, crowdfunding wasn’t just helpful, it was essential. Within 24 hours of the Kickstarter launch of his campaign, Sikora’s new Reno-based phone-case startup, Candel, reached its $25,000 goal. His team launched Candel on Jan. 20, and it’s raised more than $30,000, 14 days before the end of the campaign.

For Sikora, crowdfunding means more than just raising money. It’s building community support and raising awareness as well.

“Typically you can accomplish a lot of things at once,” Sikora said. “So, you do a huge marketing rollout, you’re getting your brand out there on all these platforms, you’re getting some marketing validation, and then you’re getting feedback too.”

On sites like Kickstarter, companies have the ability to raise high amounts of money in a short amount of time. Sikora envisions that soon, all sorts of different business owners and manufacturers will be launching products in some kind of crowdfunding system.

“It’ll be this way because of the value that you get out of it in terms of feedback and the marketing exposure and all of this stuff,” Sikora said. “It creates urgency too. It just drives so many people to one place, and in a short period of time, you get so much valuable information. It’s the perfect way to launch a product and build a brand at the same time.”

To say crowdfunding is a growing trend might be understating things. Experts from Massolution, a world-recognized crowdfunding and crowdsourcing research organization, predicted that the industry, which saw $16 billion funded in 2014, would soon surpass the venture capitalist industry’s $30 billion yearly average.

They reported that global crowdfunding platforms would see more than $34 billion funded in 2015. A 2016 report has not yet confirmed the more than 200 percent increase, but between 2013 and 2014 funding more than doubled from around $6 billion to $16 billion, providing credible evidence of the estimated growth.

Recognizing crowdfunding as a prominent option to funding different endeavors can open doors to eager supporters and donors. The business is booming, and its potential is seemingly endless. The chance to build a solid financial foundation is far from easy and getting started isn’t usually free, but spending 30 days with a nonprofit like Kickstarter might bring an individual’s dream business closer to fruition.

Marcus Lavergne can be reached at mlavergne@sagebrush.unr.edu and on Twitter @mlavergne21.